(* From 1 January, 1998, the new Swedish National Energy Administration has taken over the
responsibility for the Programme for an Environmentally Adapted Energy System in the Baltic region and
Eastern Europe (EAES Programme) from NUTEK (Swedish National Board for Industrial and Technical
Development).

Organisation includes: institutions, ministries, companies, non-governmental organisations,
etc. involved in the activity, i.e. research institutes associated with the project, auditors, government
agency closely following the activity.

3) Activity:

Item

Please fill in if applicable

General description:

Valga town is the administrative and economic centre of Valga county, located in South Estonia. The
number of inhabitants of Valga town is approx.16000. There are several boiler plants and district
heating networks.

In one of them STEM has earlier carried out a boiler conversion to renewable fuels. There were no
possibilities to regulate heat demand in the buildings and some customers who didn’t have
domestic hot water instead used water directly from heat radiators. For this reason water losses
were very high. After good results in conversion project the local municipality has been motivated
to continue with a project to decrease energy and water losses and to get higher water quality.

Type of project:a)

Energy saving in distribution and at end-users

Location (exact, e.g. city, region,

state):

Valga town

Valga County

Estonia

Activity starting date:

23. September 1994 (Letter of Intent)

In operation from:

June 1995 (step 1)

December 1995 (step 2)

Expected activity ending date:

30 September 2005

Stage of activity:b)

completed

Lifetime of activity if different from ending date:c)

Expected technical lifetime is 15 years which means that the installations is expected to be in
operation till 2011.

Technical data:d)

Installation of control equipment and heat exchangers in 79 substations aiming at reducing the
water losses in the system. In connection with the boiler conversion the boilers were changed over
from steam to hot water production which called for new water treatment equipment. The new water
treatment has been taken into operation.

The substation installations are estimated to save 2,2 GWh of heat and to reduce the water losses
corresponding to 0,5 GWh annually.

c) Methodological work will be required to define lifetime of activities.

d) Methodological work will be required to determine for each type of activity what the minimum data
requirements are.

The lifetime criteria has been arranged in different groups depending on type of implemented activities.
This classification assumes a level of operation and maintenance which is normal in western countries.

Lifetime of activity

Heat production plants (bio fuel)

25 years

New installation of all main equipment parts (fuel handling system, firing equipment and boiler)
and modernisation of secondary equipment.

15 years

Conversion of existing boiler but new installation fuel handling system and firing equipment.
Modernisation of secondary equipment.

10 years

Limited installation of new equipment (only one part of the three main parts, normally the firing
equipment). Modernisation of other equipment.

Heat distribution systems and sub-stations

25 years

Pre-fabricated pipes and installations using certified contractors and supervisor according to EN
norms and applicable district heating practise

15 years

Pre-fabricated pipes and installations without using certified contractors and supervisor

10 years

Modernisation of existing pipes.

Energy efficiency in buildings

25 years

Additional insulation roofs walls etc. with Scandinavian technology.

New installed heating systems.

15 years

Renovation and balancing of heating systems including thermostat valves.

10 years

Weather stripping windows, doors etc.

if a combination of measures is done a reasonable lifetime for the project have to be calculated.

4) Cost (to the extent possible):

To the investment costs are referred the cost of the investment proper and the accumulated interest during
the grace period, generally 2 years.

The AIJ/JI cost items are the costs for:

Technical assistance, a technical and administrative support from consultants, during the period from
definition of the project till commissioning. These costs are paid by STEM.

Follow-up, an annual technical and economic follow-up by consultants, hired by STEM, of the operating
results of the plant with the objective to improve on its techno-economic sustainability and its climate
effect. The cost indicated is an average cost per project.

Reporting costs – i e costs in connection with the annual reporting of the project’s
climate effects to UNFCCC. The cost indicated is an average cost per project.

Administration –Costs for seminars, handbooks, education (capacity building) and average costs of
STEM staff per project.

Difference in interest rates. STEM applies for its loans generally an interest rate corresponding to
6-month STIBOR (Stockholm InterBank Rate, in April 1999 3,0 %). Assuming a normal lending rate of 7 % means
that this loan is associated with a cost of 4 % in relation to normal lending rate.

Investment/instalment = the borrower’s possible own financing of the investment, followed by the
borrower’s repayment of the loan.

All costs in USD

Country

Valga II (DH)

1995

1996

1997

1998

1999

2000

0

1

2

3

4

5

Investment

1. Loan/debt to STEM

114000

273700

285800

250100

214363

180568

2. Added costs

0

159700

12100

0

0

1943

3.Technical assistance

64000

0

0

0

0

0

AIJ/JI

4. Follow up

0

8200

8500

2200

2267

2139

A. Sweden

costs

5. Reporting costs

0

0

850

0

744

301

6. Administration

53000

0

0

0

0

0

7. Difference in interest

4%

10948

11432

10004

8575

7223

8.Accum. costs for AIJ/JI

117000

136148

156930

169134

180720

190383

9.Total costs

231000

409848

442730

419234

395082

370951

Investment

1. Investment/Instalment

0

0

0

35700

35737

35737

2. Estonia

AIJ/JI

2. Reporting costs

0

0

0

0

0

0

costs

3. Other costs

0

0

0

0

0

0

4. Accum. costs for AIJ/JI

0

0

0

0

0

0

5. Total costs

0

0

0

35700

71437

107175

1 USD=

10

SEK

5) Mutually agreed assessment procedures:

Describe the procedures, including name of organisations involveda):

Ministry of the Environment of Estonia is a central Estonian authority responsible on reporting of
JI projects. This authority assigns a local institution, which is involved in to the evaluation of
the climate effects of this project and takes the main responsibility to continue measuring,
results collecting for JI-reporting.

Bearing in mind that all activities implemented jointly under this pilot phase require prior acceptance,
approval or endorsement by the Governments of the Parties participating in these activities, which shall be
shown as follows:

(a) In the case of joint reporting, the report is submitted by the designated national authority of one
participating Party with the concurrence of all other participating Parties as evidenced by attached
letters issued by the relevant national authorities;

In the case of separate reporting, the reports are submitted separately by the designated
national authority of each and every participating Party. Information will only be compiled once reports
have been received from all participating Parties.

1) For the activity:

* Subsequent reports:

Fourth report. First report was submitted 1997.

2) This report is a joint report:

Yes, Agreement with designated national authority was signed 1997.

General short comment by the government(s) if applicable:

cf. Annex II, section B

C. Compatibility with and supportiveness of national economic development and socio economic and
environment priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national
economic development and socio economic and environment priorities and strategies

The project meets the following objectives in the Estonian Energy Law, Estonian National
Environmental Strategy, Estonian National Environmental Action Plan, Act on Sustainable Development
and the Long-term Development Plan for the Estonian Fuel and Energy Sector:

- efficient and sustainable use of energy resources;

- to increase the share of renewable energy sources in the primary energy demand from present 8% to
13% to the year 2010;

- to reduce the environmental damage arising from fuel and energy production, transport, conversion
and distribution;

- to create the reliable energy conservation system stimulating the implementation of energy
conservation measures by consumers;

- to attract foreign investments for projects which ensure better use natural resources as well as
environmental improvement;

- to develop co-operation between Baltic, Nordic and Central European countries

D. Benefits derived from the activities implemented jointly project

Whenever possible, quantitative information should be provided. Failing that, a qualitative description
should be given. If quantitative information becomes available, it could be submitted using the update(s).
(If the amount of quantitative information is too large, the source could be indicated.)

Item

Please fill in

Describe environmental benefits in detail:

Annual emission reduction:

Projected: 2000

1256 ton CO2 1721 ton CO2

20,4 ton SO2 28 ton SO2

3,3 ton NOx 4,5 ton NOx

Do quantitative data exist for evaluation of environmental benefits?

Yes. Some measurements have carried out.

Describe social/cultural benefits in detail:

More stable heat supply to customers

Increased motivation to pay the energy bills

Do quantitative data exist for evaluation of social benefits?

Yes. Some reports have been produced.

Valga Town Energy Plan, 1999

Describe economic benefits in detail:

Decreased energy consumption

Prolonged lifetime for boilers and district heating network through rising water quality

Do quantitative data exist for evaluation of economic benefits?

Yes. Some reports have been produced.

Valga Town Energy Plan, 1999

E. Calculation of the contribution of activities implemented jointly projects that bring about real,
measurable and long-term environmental benefits related to the mitigation of climate change that would not
have occurred in the absence of such activities

1) Estimated emissions without the activity (project baseline):

Description of the baseline or reference scenario, including methodologies applied:

Present data reflect emission reductions using status quo (emissions in the period before the conversion to
renewable fuel) for the baseline case. Calculations, according to the top-down method, for emissions from
different types of projects in the baseline case are being made. The changed calculation method will result
in a change in emission reduction.

The new data will be introduced as soon as available.

2) Estimated emissions with the activity:

Description of the scenario, including methodologies applied:

Emission reductions are calculated using the IPCC Guidelines, using the Carbon Emission Factor (CEF) for
different types of fuel, using actual system efficiency. For boiler conversion, the decrease in emissions
is calculated in relation to the amount of fossil fuel replaced (status quo).

For an energy efficiency project the decrease in emissions reflects the amount of fuel that is saved
through the project. In the case that the system uses renewable fuels, the reduction is calculated
comparing the amount of fossil fuels that was used before the conversion to renewable fuels.

Below comparison is based upon that the base-line scenario represents a status quo solution.

Status quo data:

Fuel

Mazout

Fossil fuel boilers efficiency

0,8

District heating system efficiency

0,56

Fill in the following tables as applicable:

Summary table: Projected emission reductions:

GHG

Year 1

=1995

Year 2

=1996

Year 3

=1997

Year 4

=1998

Year 5

=1999

Year 6

=2000

...

Year 16

=2010

Planned energy savings MWh/year

700

2700

2700

2700

2700

2700

2700

A) Project baseline scenario

CO2

315

1256

1256

1256

1256

1256

1256

CH4

-

-

N2O

-

-

other

-

-

B) Project activity scenarioa)

CO2

0

0

0

0

0

0

0

CH4

-

-

N2O

-

-

other

-

-

C) Effect ( B-A )

CO2

-315

-1256

-1256

-1256

-1256

-1256

-1256

CH4

-

-

N2O

-

-

Other

-

-

D) Cumulative effect

CO2

-315

-1571

-2826

-4082

-5337

-6593

-19149

CH4

-

-

N2O

-

-

Other

-

-

a) Includes indirect GHG leakages.

Summary table: Actual emission reductions:

GHG

Year 1

= 1995

Year 2

=1996

Year 3

=1997

Year 4

=1998

Year 5

=1999

Year 6

=2000

...

Year 16

=2010

Factual energy savings MWh/year

762

3691

3458

3717

4074

3616

3616

A) Project baseline scenario

CO2

346

1773

1658

1771

1947

1721

1721

CH4

-

-

N2O

-

-

other

-

-

B) Project activity scenarioa)

CO2

0

0

0

0

0

0

0

CH4

-

-

N2O

-

-

other

-

-

C) Effect ( B-A )

CO2

-346

-1773

-1658

-1771

-1947

-1721

-1721

CH4

-

-

N2O

-

-

Other

-

-

D) Cumulative effect

CO2

-346

-2119

-3777

-5548

-7495

-9216

-26431

CH4

-

-

N2O

-

-

Other

-

-

a) Includes indirect GHG leakages.

F. Additionality to financial obligations of Parties included in Annex II to the Convention within the
framework of the financial mechanism as well as to current official development assistance flows

Please indicate all sources of project funding.

Category of funding

(For each source one line)

Amount

(US dollars)

Loan from NUTEK

325.000

Grant from NUTEK for technical assistance

80.000

1 USD = 8,00 SEK

G. Contribution to capacity building, transfer of environmentally sound technologies and know-how to
other Parties, particularly developing country Parties, to enable them to implement the provisions of the
Convention. In this process, the developed country Parties shall support the development and enhancement of
endogenous capacities and technologies of developing country Parties

Transfer of environmentally sound technologies and know-how

Describe briefly

Schematically, the transfer of knowledge involves the following activities over time:

i) Technology transfer through NUTEK/STEM technical specialist during the implementation of the
project.

ii) Technology transfer through co-operation between foreign supplier and local partner

iii) Conferences, seminars, documentation and training.

iv) Stimulate "net-working" for the exchange of experience between plant owners with
similar problems, e g "bio-clubs"

Technology transfer has taken place through:

STEM technical specialist support to the local project leader and municipality;

Knowledge in negotiations to foreign companies;

Knowledge in managing and planning of projects;

Transferring of environmental issues to the local parties;

Transferring of knowledge in operation and maintenance issue.

Personal involved in the project has been invited to different seminars and workshops
and, documentation for training has been handed over.

There were arranged seminars through close cooperation between STEM and Estonian partners:

iv) Activities have been supported by STEM to stimulate cooperation with local experts,
consultants, project owners to achieve two-way communication and to find respect for chosen
solutions from both sides.

Projects has been visited by specialist of other areas (incl. From Russia, Baltic Countries) to
exchange of experience.

Endogenous capacity supported or enhanced:

Endogenous capacity

(Name of organisation1)

Development (DEV) /

enhancement (ENH)

Describe briefly

Valga Soojus AS

(DEV)

In Valga a co-operation concerning customer contacts and supplier-customer agreements have been
developed and Valga is today one of the forerunners in Estonia as regards information to customers.

H. Additional comments, if any, including any practical experience gained or technical difficulties,
effects, impacts or other obstacles encountered

Fill in as appropriate:

1) Any practical experience gained:

0ne of the lessons learnt is that it is important to have persons responsible for the adjustment of the
equipment for each building and that they have good understanding of the consequences of their actions

Maintenance service of heat substation must be developed. Every spring heating company specialists will
check heat substations components and recommend to the house owners necessary maintenance work.

2) Technical difficulties:

In the VLK small district heating region are problems of keeping necessary pressure drop in the substations
and some heat exchanges for space heating are reinstalled to reduce required pressure drop. The district
heating pump capacity is increased in 2000 to increase pressure drop in substations.

3) Effects encountered:

In some building too much emphasis was put on reduction of heat consumption and limiting the heat bill. The
persons adjusting the equipment concentrated more on limiting the metered heat consumption than an
maintaining an acceptable indoor temperature.

The project has inspired other house owners to renovate heat substations.

Improved and more stable hydraulic situation in the network.

4) Impacts encountered:

Better indoor climate in the most of the buildings and improved domestic hot water supply.

The value of the flats, when sold has been higher in the buildings with good energy management.

The experiences from the energy efficiency project in the residential buildings have used in framing
Development Plan of Estonia Housing Sector to the year 2010 ( Tallinn, 1999).

5) Other obstacles encountered:

6) Other:

Calculations of the volume of emissions of sulphur dioxide and nitrogen oxide in the section D are revised
and new emissions values are calculated according to the Regulation No. 33 of 17. March 1999 of the
Ministry of the Environment "The procedure and methods of determination of the volume of pollutants
from combustion plants to the air".